80/20 Rule for Coworking Spaces
It’s easy to be really busy all day long in a coworking business and not get the right things done.
It’s even easier to pay your team to be in the space all day and not get the right things done.
What are the right areas of focus?
How much time should you and/or your team focus on them in a given day?
Let’s approach this question using the 80/20 rule. (Don’t miss our podcast on this topic)
The 80/20 rule was originally called The Pareto principle. The Pareto principle states that for many outcomes roughly 80% of consequences come from 20% of the causes (the “vital few”). (source: Wikipedia).
Here are some examples of the 80/20 rule (all sourced from Wikipedia).
The Pareto principle also could be seen as applying to taxation. In the US, the top 20% of earners paid roughly 80-90% of Federal income taxes in 2000 and 2006, and again in 2018.
In computer science the Pareto principle can be applied to optimization efforts. For example, Microsoft noted that by fixing the top 20% of the most-reported bugs, 80% of the related errors and crashes in a given system would be eliminated
In baseball: 15% of all the players last year produced 85% of the total wins with the other 85% of the players creating 15% of the wins
In health care in the United States, in one instance 20% of patients have been found to use 80% of healthcare resources.
Many video rental shops reported in 1988 that 80% of revenue came from 20% of videotapes.
And finally, more relevant to our discussion...It is an axiom of business management that "80% of sales come from 20% of clients.”
We might also assume that 80% of our leads come from 20% of our sources.
20% of our members will be very engaged in our community while 80% will be less so.
20% of our members will drink 80% of the coffee.
20% of our virtual mail clients will produce 80% of our mail.
AT THE HIGHEST LEVEL, WHAT ARE YOUR PRIORITIES FOR YOUR COWORKING SPACE?
What are the 20% of activities that drive 80% of your results?
Getting more leads
Closing leads
Retaining members
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Before we dive in here, I want to recognize that as I write this blog post, we are still managing through a global pandemic. During this time, we are doing everything we can to keep our doors open. We are chasing the “long tail” opportunities that might fall out of the 20% rule.
We try to sell a few of many different types of memberships.
We try to sell memberships to a lot of different segments of members.
We try to expand our product mix outside of our core space offerings.
We try marketing channels that have never brought in a lot of leads, but we’ll take all the leads we can get, no matter how much work they take to get!
I get it. Do what you need to do to sleep at night.
But what I want to encourage you to do the 20% activities FIRST. Do NOT get into a mode where you’re throwing spaghetti at a wall, testing something new each week, and taking your eye off of your core business drivers.
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Let’s 80/20 the 20% of activities that drive 80% of the results in your business.
Here are the key activities that drive results in our business.
Getting more leads
Converting more leads
Retaining more members
Getting More Leads:
What 20% of lead sources provide 80% of our leads?
Google my Business listing
Website/SEO
Google ads
Facebook ads
Hosting events that align with your ICA
What are other sources of leads that we spend time on?
Social media posts (organic)
Emailing your marketing list
Member referrals
Attending networking events
Posting flyers
Direct mail
Signage
Sponsoring local community events
Hosting events that do NOT align with our ICA
Community co-promotion (i.e., giveaways)
Lead Conversion:
What 20% of activities drive 80% of lead conversion?
Making sure the lead shows up for a tour
Giving a great tour
Connecting the potential member with the right membership offer
Getting a potential member to come in for a trial day
Follow up communication - emails/texts/phone calls
What are other sources of conversion?
Adding to marketing newsletter
Running retargeting ads
Member Retention:
What 20% of activities drive 80% of member retention?
Members connecting with other members
Members doing business with other members
Members having positive interactions with the staff
Members feeling comfortable/proud to bring clients to the space
Other member retention activities:
Free snacks
Guest speakers
Staff connecting 1:1 with members
Staff providing services to members such as booking conference rooms, printing
Know your KPIs and Track Them so that you can 80/20 your business
80% of coworking businesses will have the same core business drivers and associated KPIs. But 20% of you will be unique!
Document the metrics associated with the activities that you’re using to:
Get more leads
Close more leads
Retain more members.
Review those metrics in your weekly team meeting.
If you are just getting started with Key Performance Indicators for your business or you want to make sure you’re not missing any, you can download our Coworking KPI guide. It’s VERY comprehensive so make sure you 80/20 the guide!
Two 80/20 Examples From The Daily Life of a Coworking Team
Why are we buying this crazy-expensive local coffee anyway?
You are reviewing your expenses at the end of the month and you notice that your coffee bill keeps going up. Coffee is one of your biggest expenses so all of a sudden, you start wondering why it is that you are buying this expensive, locally roasted coffee. There must be a cheaper, but good enough solution?
You fire off a Slack message to your team that say something like “Good morning! I’m reviewing the monthly expenses and we’re spending a LOT on coffee. Can you look for alternatives that are more budget-friendly?
Here’s what WAS on your Community Manager’s agenda for the hour or so of focus time they get each day which happen to fall into the bucket of the 20% of activities that drive 80% of your results.
Email 5 happy members the Google review request template
Post photos from the most recent member event to the Google my Business listing
NOW your Community Manager is going to spend her time worrying about the backlash she might get from the members that rave about how good the coffee is.
She’s also going to get frustrated because she feels like you’re springing a big change request on her without discussing it with her first. Now she’ll likely be distracted and less productive.
Why Does So-and-So have Twice as Many Followers on Instagram Than we do? We Need to Fix That ASAP!
You’re scrolling through your Instagram feed and click on the profile of another local space. They have twice as many followers as you!
Your ego is now on high alert. How could this be, you wonder? Your space is far more hip and community oriented!
You walk out of your office with your phone and offensive Instagram profile in hand and look for your Community Manager, who you find straightening up and disinfecting the conference room for the next booking.
You skip the small talk and get right to the point. You stick the phone and Instagram profile in front of Cathy’s nose and announce, “I need you to spend more time on social media. The space across town is kicking our butts. We can’t have that. Post more, make the posts better, whatever you need to do. Just make sure we’re keeping up!”
Does that sound like a ridiculous scene from Office Space or The Office or does that hit kind of close to home?
Now Cathy, who doesn’t consider social media content planning and strategy to be in her zone of genius, goes back to her desk, looks dejectedly at her list of priorities for the day, which included:
Add an automated reminder email sequence for scheduled tours to make sure that they show up
Phone call follow ups to three tours from yesterday to answer questions and increase the likelihood of conversion.
These two scenarios might sound a little “Made for TV drama,” but if we’re honest with ourselves, we likely recognize that there are two challenges with focusing on the things that truly drive results for our business:
Defining, tracking and evaluating KPIs
Creating a plan that we follow and track that maps out how we will prioritize our key drivers in our daily and weekly work.
Avoiding getting distracted by activities that seem important or urgent, but really just get in the way of our team getting the things done that truly get us more leads, close more leads and retain more members.
As we head into the new year, or ANYTIME you’re working on business priorities, here are the 80/20 principles to keep in mind for your coworking business:
Your easiest leads will come from active searchers that find you on Google or come to your website.
Your easiest revenue will come from your current members.. Don’t get so distracted looking for new leads that you let your member onboarding processes and community building efforts stall.
You will close more leads when you run a tight sales funnel process.
Here’s how to stay focused on the 20% of your activities that drive 80% of your results:
Create a detailed project plan with clear priorities that you review every single week with your team.
Don’t distract your team from their priorities.
Empower your team to call you out when you’re distracting them.
If you liked this topic, don’t miss the podcast episode!